What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-04-01 compared with 2025-12-19 · 159 added, 144 removed, 167 unchanged (64% of the section changed)

3 unchanged sentences

This report, including the MD&A, contains forward-looking statements within the meaning of the federal securities laws.

Words such as “believe,” “enable,” “expand,” “drive,” “execute,” “strengthen,” “deliver,” “anticipate,” “will,” “continue,” “expect,” “may,” “reduce,” “estimate,” “remain,” “decline,” “outlook,” and variations of such words and similar expressions are intended to identify forward-looking statements.

Words such as “expect,” “improve,” “intend,” “continue,” “execute,” “strengthen,” “drive,” “support,” “grow,” “reduce,” “advance,” “impact,” “focus,” “manage,” “mitigate,” “believe,” “anticipate,” “will,” “may,” “estimate,” and variations of such words and similar expressions are intended to identify forward-looking statements.

Examples of forward-looking statements include, but are not limited to, statements regarding our business and financial outlook and prospects, our plans and strategies and anticipated benefits therefrom, including with respect to the Cost Savings Program and Restructuring Plan, anticipated capital expenditures, investments, and other costs, cash flows, liquidity, dividends, anticipated conditions in our industry and the global economy.

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consumer preferences, including restaurant traffic in North America and our international markets, and an uncertain general economic environment, including as a result of tariffs and other trade policies, inflationary pressures and recessionary concerns, any of which could adversely impact our business, financial condition or results of operations, including as a result of impacts on the demand and prices for our products;

the competitive environment and related conditions in the markets in which we operate;

the availability and prices of raw materials and other commodities;

operational challenges;

our ability to successfully implement the Cost Savings Program, the Restructuring Plan or other cost savings or efficiency initiatives, including achieving the benefits of those activities and possible changes in the size and timing of related charges;

difficulties, disruptions or delays in implementing new technology;

our ability to successfully implement the Cost Savings Program, the Restructuring Plan or other cost savings or efficiency initiatives, including achieving the expected benefits of those activities and possible changes in the size and timing of related charges;

our dependence on information technology and systems, including service interruptions, misappropriation of data, or breaches of security, as well as difficulties, disruptions or delays in implementing new technology;

levels of labor and people-related expenses;

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our ability to execute on large capital projects, including construction of new production lines or facilities;

the competitive environment and related conditions in the markets in which we operate;

political and economic conditions in the countries in which we conduct business and other factors related to our international operations;

disruptions in the global economy caused by conflicts such as the war in Ukraine and conflicts in the Middle East and the possible related heightening of our other known risks;

disruptions in the global economy caused by conflicts such as the wars in Ukraine and the Middle East and the possible related heightening of our other known risks;

the ultimate outcome of litigation or any product recalls or withdrawals;

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actions of governments and regulatory factors affecting our businesses;

our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends;

our ability to pay regular quarterly cash dividends or otherwise return capital to shareholders and the amounts and timing of any future dividends or other shareholder returns;

and other risks described in our reports filed from time to time with the SEC.

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Executive Summary

Our second quarter results reflect continued momentum and share gains, notably in North America and Asia.

Volume increased 8% in the second quarter and 7% for the first half of the year.

In response, we have restarted curtailed North American production lines.

However, the global operating environment remains competitive and restaurant traffic remains down in key markets and channels.

In fiscal 2026, we anticipate that global consumers will continue to face macroeconomic and geopolitical pressures, and we will be operating in a competitive environment.

We believe our disciplined execution and strategic plans are better enabling us to expand our customer base and position us to drive long-term growth.

Lamb Weston’s global teams are executing our strategy, strengthening our customer relationships, driving cost savings and delivering strong cash flow.

Actions taken over the past two fiscal years have improved our manufacturing costs per pound and lowered SG&A.

Our results for the third quarter of fiscal 2026 reflect continued momentum in our North America segment and ongoing execution of our strategic priorities, partially offset by volume declines in our International segment.

Total Company volume increased 7% in the quarter and 6% through the first three quarters of fiscal 2026, supported by share gains and strong customer retention.

In the U.S., quick service restaurant (“QSR”) traffic turned positive for the first time since late fiscal 2024, increasing 1% during the quarter.

Within the quarter, QSR burger traffic returned to growth in February, although it declined 1% for the full period.

QSR chicken continued to be a strong contributor with sustained growth.

These trends, coupled with execution across sales, operations, and supply chain, contributed to solid performance within the North America segment.

During the quarter, we continued to advance our cost savings and productivity initiatives and expect to exceed our cost reduction target of at least $250 million by fiscal year-end 2028.

This program has provided us greater flexibility to strategically support customers through price and trade investments while continuing to strengthen our cost structure.

Segment Adjusted EBITDA declined compared to the prior year quarter, primarily driven by unfavorable price/mix, a net $32.5 million write-off of excess raw potatoes within our International segment, and higher fixed-cost absorption associated with lower utilization of international production facilities.

To improve asset utilization and reduce operating costs, we closed our Munro, Argentina facility in the third quarter and consolidated production into our modern Mar del Plata facility.

We also began the temporary curtailment of a production line in the Netherlands early in the fourth quarter of fiscal 2026.

The external operating environment remains dynamic.

The escalating conflict in the Middle East has contributed to volatility in sales volumes in the region, as well as increased variability in certain commodity and transportation markets.

While these impacts were small in the third quarter, we expect the conflict to have a more meaningful impact on our fourth‑quarter results, particularly in our International segment.

We continue to focus on operational execution and on managing the factors within our control to mitigate the effects of these disruptions.

We ended the quarter with a strong balance sheet.

Although we did not repurchase shares during the third quarter due to trading restrictions, we implemented a Rule 10b5‑1 trading plan following the end of the restrictions to facilitate future purchases.

As of March 30, 2026, we have repurchased 1,053,429 shares of common stock under our share repurchase program for an aggregate purchase price of approximately $44 million.

Results of Operations

Thirteen Weeks Ended November 23, 2025 compared to Thirteen Weeks Ended November 24, 2024

Thirteen Weeks Ended February 22, 2026 compared to Thirteen Weeks Ended February 23, 2025

Net Sales and Segment Adjusted EBITDA

Thirteen Weeks Ended

(in millions, except percentages) November 23,

2025 November 24,

(in millions, except percentages) February 22,

2026 February 23,

Increase (Decrease) % Increase (Decrease) at Constant Currency

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International 18.5 94.1 (80)%

Net sales for the second quarter of fiscal 2026 increased $17.2 million to $1,618.1 million compared to the prior year quarter, and included a favorable foreign currency impact of $24.4 million.

Net sales at constant currency was essentially flat over the prior year quarter, as an 8% increase in volume was offset by an 8% decline in price/mix.

(1) Foreign currency translation had a minimal impact on overall Segment Adjusted EBITDA for the periods presented, as we mitigate exposure by purchasing goods and services in local currency where practical.

Net sales for the third quarter of fiscal 2026 increased $44.3 million to $1,564.8 million compared to the prior year quarter, including a favorable foreign currency impact of $47.4 million.

Net sales at constant currency was essentially flat over the prior year quarter, as a 7% increase in volume was offset by a 7% decline in price/mix.

Net sales and price/mix at constant currency are calculated by translating financial data for the current year period at prior year average exchange rates.

Volume growth was driven by customer wins, share gains and retention, particularly in North America and Asia.

The decline in price/mix reflects ongoing support of customers through price and trade, including the carryover impact of fiscal 2025 pricing, in a competitive global market environment.

North America segment net sales, which includes all sales to customers in the U.S., Canada, and Mexico, was essentially flat, declining $2.6 million to $1,069.5 million.

Volume increased 8% compared to the prior year quarter driven by recent customer contract wins, share gains and growth across channels.

In response, we have restarted curtailed North American production lines.

Price/mix declined 8%, driven by the ongoing support of customers through price and trade, including the carryover impact from fiscal 2025 pricing, and an unfavorable mix.

International segment net sales, which includes all sales to customers outside of North America, increased $19.8 million, or 4%, to $548.6 million over the prior year quarter, including a favorable $22.6 million from foreign currency translation.

Volume growth was driven by North America customer wins, share gains and strong retention.

The decline in price/mix reflects continued price and trade support for customers and consumer shifts toward value-oriented channels and brands, including increased sales to chain customers, which generally carry lower pricing.

The International segment also experienced softer demand in key international markets given competitive industry dynamics, notably in EMEA.

North America segment net sales, which includes all sales to customers in the U.S., Canada, and Mexico, increased $48.7 million, or 5%, to $1,035.0 million.

Volume increased 12% compared to the prior year quarter driven by customer contract wins, share gains and growth.

Price/mix declined 7%, reflecting continued price and trade support for customers and a mix shift toward faster-growing chain customers and private-label products, which generally carry lower margins than other channels.

International segment net sales, which includes all sales to customers outside of North America, declined $4.4 million, or 1%, to $529.8 million over the prior year quarter, including a favorable foreign currency impact of $43.7 million.

Net sales at constant currency declined 9%, or $48.1 million compared to the prior year quarter.

Volume increased 7%, driven by growth in Asia and with multinational chain customers.

Price/mix at constant currency declined 8%, reflecting ongoing price and trade to support customers in a continued competitive environment, as well as an unfavorable mix.

Gross profit increased $46.5 million versus the prior year quarter to $324.3 million.

Adjusted Gross Profit declined $15.6 million versus the prior year quarter to $327.9 million due primarily to unfavorable price/mix.

Total manufacturing cost per pound was lower, reflecting the benefits from cost savings initiatives and improved operating efficiencies in our North America segment.

These initiatives more than offset inflationary pressures in key input categories other than raw product and higher manufacturing costs per pound in our International segment, due to less favorable operating conditions and elevated production expenses.

Volume declined 2%, driven by softer demand in key international markets, notably in EMEA.

Price/mix at constant currency declined 7%, primarily reflecting ongoing price and trade to support customers and, to a lesser extent, an unfavorable mix that favors lower margin geographies and products.

Gross profit declined $90.9 million versus the prior year quarter to $331.6 million.

Adjusted Gross Profit declined $92.9 million versus the prior year quarter to $327.5 million, primarily reflecting unfavorable global price/mix, as well as a net $32.5 million pre-tax charge related to the write-off of excess raw potatoes in the International segment due to lower than planned sales volumes in a competitive market environment.

Total manufacturing cost per pound increased, which reflected the raw potato write-off, increased fixed factory burden costs associated with underutilized international production facilities and inflationary pressures across key input categories globally.

These higher costs were partially offset by benefits from cost savings initiatives as well as improved operating efficiencies in our North America segment.

Selling, General and Administrative Expenses

SG&A declined $7.4 million versus the prior year quarter to $156.8 million.

Adjusted SG&A declined $7.8 million versus the prior year quarter to $145.1 million, primarily driven by the benefits of ongoing cost savings initiatives, partially offset by compensation and benefits accruals.

Adjusted SG&A increased $9.4 million versus the prior year quarter to $157.4 million, primarily driven by higher compensation and benefit accruals and $12.7 million write-off of capitalized costs associated with certain projects no longer under development.

These costs were partially offset by the benefit of ongoing cost savings initiatives.

Net Income, Adjusted EBITDA and Segment Adjusted EBITDA

Net income increased $98.2 million from the prior year quarter to $62.1 million.

Adjusted EBITDA declined $8.5 million versus the prior year quarter to $285.7 million.

Lower Adjusted Gross Profit and Adjusted Equity Method Investment Earnings were partially offset by lower Adjusted SG&A.

North America Segment Adjusted EBITDA increased $18.6 million to $287.8 million.

The increase was driven by higher volume, lower manufacturing costs per pound, and lower Adjusted SG&A, reflecting the benefit of cost savings initiatives, including operational efficiencies.

These gains were partially offset by continued price and trade support for our customers.

International Segment Adjusted EBITDA declined $21.4 million to $27.2 million.

The decrease was primarily attributable to higher manufacturing costs per pound, including increased fixed factory burden costs resulting from lower utilization of international production facilities and start-up expenses associated with the new production facility in Argentina.

These higher manufacturing costs were partially offset by the benefit of cost savings initiatives and higher sales volume.

Net income declined $92.0 million from the prior year quarter to $54.0 million.

Adjusted EBITDA declined $101.3 million versus the prior year quarter to $271.7 million, reflecting lower Adjusted Gross Profit and higher Adjusted SG&A.

North America Segment Adjusted EBITDA declined $12.8 million to $289.8 million compared to the prior year quarter.

Higher volumes, lower manufacturing costs per pound, and lower Adjusted SG&A, reflecting cost savings initiatives and improved operating efficiencies, were more than offset by continued price and trade support for customers and an unfavorable mix.

International Segment Adjusted EBITDA declined $75.6 million to $18.5 million compared to the prior year quarter.

The decrease was primarily attributable to lower sales, higher manufacturing costs per pound, including a net $32.5 million pre-tax charge for the write-off of excess raw potatoes due to lower than planned sales volumes, and increased fixed factory burden costs associated with underutilization of international production facilities.

The higher manufacturing costs were partially offset by benefits from cost savings initiatives.

To improve utilization and respond to the challenging operating environment in the International segment, we closed our Munro, Argentina plant during the third quarter and consolidated Latin America production into our new, modern facility in Mar del Plata, Argentina.

As previously announced, we also temporarily curtailed a production line in the Netherlands beginning early in the fourth fiscal quarter of 2026.

Interest Expense, Net

Interest expense, net increased $1.0 million, versus the prior year quarter, to $44.3 million, driven by a decline in the benefit from capitalized interest as our capacity expansion projects were all finalized prior to the second quarter of fiscal 2026.

The decline in benefit from capitalized interest was partially offset by lower borrowings on our revolving credit facility.

Interest expense, net declined $2.3 million, versus the prior year quarter, to $45.0 million, driven by lower borrowings on our revolving credit facility, partially offset by a reduced benefit from capitalized interest.

Income Tax Expense

Income tax expense for the second quarter of fiscal 2026 and 2025 was $36.0 million and $13.4 million, respectively.

The effective income tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was 36.7% and (59.0)% in the second quarter of fiscal 2026 and 2025, respectively.

The results in both periods reflect the impact of items outlined in the Reconciliations of Non-GAAP Financial Measures.

In addition, we recorded $14.4 million of discrete tax expense in the second quarter of fiscal 2025, primarily related to the establishment of a full valuation allowance against certain international deferred tax assets.

Excluding the impact of these items, the Company’s effective tax rate was 31.8% in the second quarter of fiscal 2026, versus 24.7% in the prior year quarter.

Compared to the second quarter of fiscal 2025, the effective tax rate excluding the impact of these items is higher primarily due to having a larger proportion of losses in certain jurisdictions with no expected tax benefits.

Income tax expense for the third quarter of fiscal 2026 and 2025 was $30.3 million and $57.5 million, respectively.

The effective income tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was 35.9% and 28.3% in the third quarter of fiscal 2026 and 2025, respectively.

The effective tax rate for our current quarter reflects the impacts of comparability items, most notably the expenses related to our Cost Savings Program and Restructuring Plan, as discussed in more detail in the Reconciliations of Non-GAAP Financial Measures.

Excluding the impact of these items, the Company’s effective tax rate was 21.8% for the third quarter of fiscal 2026, versus 28.1% for the prior year quarter.

Compared to the third quarter of fiscal 2025, the effective tax rate excluding the impact of these items is lower primarily due to having a smaller proportion of losses with no expected tax benefits in certain jurisdictions.

Equity Method Investment Earnings

Equity method investment earnings from unconsolidated joint ventures were $3.2 million and $2.1 million for the second quarter of fiscal 2026 and 2025, respectively.

Adjusted Equity Method Investment Earnings was $3.2 million and $11.1 million for the second quarter of fiscal 2026 and 2025, respectively.

The decline of $7.9 million in earnings was primarily the result of lower production volume and an unfavorable mix of sales.

Equity method investment earnings from unconsolidated joint ventures were $2.7 million and $2.1 million for the third quarter of fiscal 2026 and 2025, respectively.

The increase of $0.6 million in earnings was primarily the result of higher volumes and gross margin, partially offset by an unfavorable mix of sales.

The results for the current and prior year quarters reflect earnings associated with our 50% interest in Lamb Weston/RDO Frozen, an unconsolidated potato processing joint venture in Minnesota.

Twenty-Six Weeks Ended November 23, 2025 compared to Twenty-Six Weeks Ended November 24, 2024

Thirty-Nine Weeks Ended February 22, 2026 compared to Thirty-Nine Weeks Ended February 23, 2025

Net Sales and Segment Adjusted EBITDA

Twenty-Six Weeks Ended

(in millions, except percentages) November 23,

2025 November 24,

Thirty-Nine Weeks Ended

(in millions, except percentages) February 22,

2026 February 23,

Increase (Decrease) % Increase (Decrease) at Constant Currency

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International 102.9 194.1 (47)%

Net sales for the first half of fiscal 2026 increased $22.3 million to $3,277.3 million compared to the prior year, including a favorable foreign currency impact of $48.0 million.

Net sales at constant currency declined 1% over the first half of fiscal 2025, as a 7% increase in volume was more than offset by an 8% decline in price/mix.

Volume growth was driven by customer wins, share gains, and retention, particularly in North America and Asia.

Price/mix reflects continued price and trade support for our customers in the current competitive environment.

North America segment net sales for the first half of fiscal 2026, which includes all sales to customers in the U.S., Canada, and Mexico, declined $21.8 million, or 1%, to $2,154.0 million.

Volume increased 7% compared to the first half of the prior year supported by recent customer contract wins, share gains and growth across channels.

In response, we have restarted curtailed North American production lines.

Price/mix declined 8%, driven by competitive market dynamics and an increase in price and trade to support our customers.

International segment net sales for the first half of fiscal 2026, which includes all sales to customers outside of North America, increased $44.1 million, or 4%, to $1,123.3 million year-over-year, including a favorable $47.1 million from foreign currency translation.

Net sales at constant currency was flat.

Volume increased 7%, driven by growth in Asia and with multinational chain customers.

Price/mix at constant currency declined 7%, reflecting pricing actions in response to an increasingly competitive environment.

Gross profit increased $32.9 million versus the first half of fiscal 2025 to $666.7 million.

Adjusted Gross Profit declined $29.8 million versus the prior year to $666.8 million due primarily to unfavorable price/mix, increased factory burden, and costs associated with the start-up of our new production facility in Argentina.

This impact was partially offset

by higher volumes and benefits from cost savings initiatives.

These initiatives delivered improved operational efficiencies and lower manufacturing costs per pound.

Net sales for the first three quarters of fiscal 2026 increased $66.7 million to $4,842.2 million compared to the prior year, including a favorable foreign currency impact of $95.4 million.

Net sales at constant currency declined 1% over the first three quarters of fiscal 2025, as a 6% increase in volume was more than offset by a 7% decline in price/mix.

Volume growth was driven by customer wins, share gains, and retention, particularly in North America, China, and Asia Pacific.

Price/mix reflects continued price and trade support for our customers and consumer shifts toward value-oriented channels and brands, including increased sales to chain customers, which generally carry lower pricing.

North America segment net sales for the first three quarters of fiscal 2026, which includes all sales to customers in the U.S., Canada, and Mexico, increased $27.0 million, or 1%, to $3,189.1 million.

Volume increased 8% compared to the first three quarters of the prior year supported by recent customer contract wins, share gains and growth.

In response, we restarted curtailed North American production lines.

International segment net sales for the first three quarters of fiscal 2026, which includes all sales to customers outside of North America, increased $39.7 million, or 2%, to $1,653.1 million year-over-year, including a favorable $90.7 million from foreign currency translation.

Net sales at constant currency declined 3%, or $51.0 million.

Volume increased 4%, driven by growth in China, Asia Pacific, and Latin America.

Price/mix at constant currency declined 7%, reflecting ongoing price and trade to support customers and an unfavorable mix that favors lowered priced geographies and products.

Gross profit declined $58.0 million versus the first three quarters of fiscal 2025 to $998.3 million.

Adjusted Gross Profit declined $122.7 million versus the prior year to $994.3 million primarily reflecting unfavorable global price/mix, as well as a net $45.6 million pre-tax charge related to the write-offs of excess raw potatoes in our International segment due to lower than planned sales volumes.

Total manufacturing costs per pound were relatively flat despite higher input costs and fixed factory burden.

Results also include costs associated with the start-up of our new production facility in Argentina.

These impacts were mostly offset by higher volumes, lower raw potato prices, and savings from our cost reduction initiatives, which delivered improved operational efficiencies.

Selling, General and Administrative Expenses

SG&A declined $4.0 million versus the first half of fiscal 2025 to $324.6 million.

Adjusted SG&A declined $31.8 million versus the prior year to $277.5 million, reflecting the benefits of ongoing cost savings initiatives, partially offset by compensation and benefit accruals.

SG&A declined $11.4 million versus the first three quarters of fiscal 2025 to $481.4 million.

Adjusted SG&A declined $22.4 million versus the prior year to $434.9 million, reflecting benefits of ongoing cost savings initiatives, partially offset by higher compensation and benefit accruals and $18.6 million for write-offs of capitalized costs associated with certain projects no longer under development.

Net Income, Adjusted EBITDA and Segment Adjusted EBITDA

Net income increased $35.1 million from the first half of fiscal 2025 to $126.4 million.

Adjusted EBITDA declined $5.8 million versus the first half of fiscal 2025 to $285.7 million.

Net income declined $56.9 million from the first three quarters of fiscal 2025 to $180.4 million.

Adjusted EBITDA declined $107.1 million versus the first three quarters of fiscal 2025 to $859.5 million.

Lower Adjusted SG&A was more than offset by lower Adjusted Gross Profit and lower Adjusted Equity Method Investment Earnings.

North America Segment Adjusted EBITDA was essentially flat at $547.8 million in the first half of fiscal 2026 compared to the first half of fiscal 2025.

Higher sales volumes, as well as lower manufacturing costs per pound and lower Adjusted SG&A, both of which benefited from cost savings initiatives, were offset by price and trade support for our customers.

North America Segment Adjusted EBITDA declined $12.2 million to $837.6 million in the first three quarters of fiscal 2026 compared to the same period in fiscal 2025.

Higher sales volumes, along with lower manufacturing costs per pound and reduced Adjusted SG&A, both supported by cost savings initiatives, were more than offset by price and trade support provided to customers and unfavorable mix.

International Segment Adjusted EBITDA declined $91.2 million to $102.9 million.

The decrease primarily reflects unfavorable price/mix and higher manufacturing costs per pound, driven by lower utilization of our international production facilities and start-up expenses for our new plant in Argentina.

These higher manufacturing costs were partially offset by increased sales volumes and benefits from cost savings initiatives.

The decrease primarily reflects unfavorable price/mix and higher manufacturing costs per pound, driven by a net $45.6 million charge related to the write-offs of excess raw potatoes, lower utilization of our international production facilities, and start-up expenses for our new plant in Argentina.

These higher manufacturing costs were partially offset by benefits from cost savings initiatives.

Interest Expense, Net

Interest expense, net declined $0.5 million, versus the first half of fiscal 2025, to $88.0 million, reflecting the impact of lower total debt outstanding primarily driven by lower borrowings under our revolving credit facility, primarily offset by a decline in the benefit from capitalized interest as our capacity expansion projects were all finalized prior to the second quarter of fiscal 2026.

Interest expense, net declined $2.8 million, versus the first three quarters of fiscal 2025, to $133.0 million, reflecting the impact of lower total debt outstanding primarily driven by lower borrowings under our revolving credit facility, partially offset by a decline in the benefit from capitalized interest as our capacity expansion projects were completed in the first half of fiscal 2026.

Income Tax Expense

Income tax expense for the first half of fiscal 2026 was $83.9 million compared to $64.2 million in the prior year period.

The effective income tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was 39.9% and 41.3% for the first half of fiscal 2026 and 2025, respectively.

Income tax expense for the first three quarters of fiscal 2026 was $114.2 million compared to $121.7 million in the prior year period.

The effective income tax rate (calculated as the ratio of income tax expense to pre-tax income, inclusive of equity method investment earnings) was 38.8% and 33.9% for the first three quarters of fiscal 2026 and 2025, respectively.

Both periods reflect the impact of items outlined in the Reconciliations of Non-GAAP Financial Measures.

In the first half of fiscal 2026 and 2025, we recorded $9.8 million and $19.2 million of discrete tax expense, respectively, primarily related to the establishment of a full valuation allowance against certain international deferred tax assets.

Excluding these items, the effective tax rate was 31.1% in the first half of fiscal 2026, versus 26.3% in the prior year period.

The higher rate compared to the second half of fiscal 2025 primarily reflects a larger proportion of losses in certain jurisdictions with no expected tax benefits.

In the first three quarters of fiscal 2026 and 2025, we recorded $7.1 million and $18.2 million of discrete tax expense, respectively, primarily related to the establishment of a full valuation allowance against certain international deferred tax assets.

Excluding these items, the effective tax rate was 28.9% in the first three quarters of fiscal 2026, versus 27.0% in the prior year period.

The enactment of the One Big Beautiful Bill Act (“OBBBA”) in July 2025 introduced a wide range of tax policy changes.

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Accounting Standards Codification 740, Income Taxes , requires the effects of changes in tax rates and laws to be recognized in the period in which the legislation is enacted.

We are actively evaluating the potential implications on our consolidated financial statements.

In the first half of fiscal 2026, the impacts did not have a material effect on the tax rate.

In the first three quarters of fiscal 2026, the impacts did not have a material effect on the tax rate.

For the full year, we do anticipate a favorable cash tax timing benefit related to OBBBA.

Equity Method Investment Earnings

Equity method investment earnings from unconsolidated joint ventures were earnings of $2.6 million and $13.4 million for the first half of fiscal 2026 and 2025, respectively.

Adjusted Equity Method Investment Earnings was $2.6 million and $22.4 million for the first half of fiscal 2026 and 2025, respectively.

The decline of $19.8 million in earnings

was primarily the result of lower gross profit, due primarily to sales volume and unfavorable price/mix.

Equity method investment earnings from unconsolidated joint ventures were earnings of $5.3 million and $15.5 million for the first three quarters of fiscal 2026 and 2025, respectively.

Adjusted Equity Method Investment Earnings was $5.3 million and $24.5 million for the first three quarters of fiscal 2026 and 2025, respectively.

The decline of $19.2 million in earnings was primarily the result of lower gross profit, due primarily to lower sales volume and unfavorable price/mix.

The results for the current and prior year reflect earnings associated with our 50% interest in Lamb Weston/RDO Frozen.

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Sources and Uses of Cash

As of November 23, 2025, we had $82.7 million of cash and cash equivalents, with $1,350.3 million available for borrowing under our revolving credit facility.

As of February 22, 2026, we had $57.5 million of cash and cash equivalents, with $1,263.6 million additional amounts available for borrowing under our revolving credit facility.

We believe we have sufficient liquidity to meet our business requirements for at least the next 12 months.

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Below is a summary table of our cash flows, followed by a discussion of the sources and uses of cash through operating, investing, and financing activities:

Twenty-Six Weeks Ended

(in millions) November 23,

2025 November 24,

Thirty-Nine Weeks Ended

(in millions) February 22,

2026 February 23,

Net cash flows provided by (used for):

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Effect of exchange rate changes on cash and cash equivalents 3.3 0.4

Net increase in cash and cash equivalents 12.0 7.6

Net decrease in cash and cash equivalents (13.2) (3.9)

Cash and cash equivalents, beginning of period 70.7 71.4

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Operating Activities

In the first half of fiscal 2026, cash provided by operating activities increased $101.1 million to $530.4 million.

The increase largely relates to $53.7 million of favorable changes in working capital, led by lower inventories in North America, and a $47.4 million increase in net income, adjusted for non-cash items.

Compared with the first three quarters of fiscal 2025, cash provided by operating activities increased $110.3 million to $595.6 million.

The increase largely relates to $130.0 million of favorable changes in working capital, led by lower inventories in North America and timing of collections for trade receivables, partially offset by a $19.7 million decrease in net income, adjusted for non-cash items.

Investing Activities

Investing activities used $137.3 million of cash in the first half of fiscal 2026, compared with $484.9 million in the first half of fiscal 2025.

Expenditures in the first half of fiscal 2026 primarily related to our investments to expand our french fry capacity in Argentina and other production facility modernization efforts.

Expenditures in the first half of fiscal 2025 primarily related to our investments to expand our french fry capacity in the Netherlands, the U.S., and Argentina.

Investing activities used $238.0 million of cash in the first three quarters of fiscal 2026, compared with $559.0 million in the first three quarters of fiscal 2025.

Expenditures in the first three quarters of fiscal 2026 primarily related to our investments to expand our french fry capacity in Argentina and other production facility modernization efforts.

Expenditures in the first three quarters of fiscal 2025 primarily related to our investments to expand our french fry capacity in the Netherlands, the U.S., and Argentina.

The expansion in the U.S.

was completed during the fourth quarter of fiscal 2024, the expansion in the Netherlands was completed during the second quarter of fiscal 2025, and the expansion in Argentina was completed in the first quarter of fiscal 2026.

In addition, we had $14.7 million of proceeds from the sale of property, plant and equipment in the first half of fiscal 2026, an increase of $13.2 million over the first half of fiscal 2025.

In addition, we had $14.9 million of proceeds from the sale of property, plant and equipment in the first three quarters of fiscal 2026, an increase of $13.1 million over the first three quarters of fiscal 2025.

The prior year also included $20.5 million of gains from Argentina blue chip swap transactions.

Financing Activities

During the first half of fiscal 2026, we made net payments of $187.6 million under our revolving credit facilities.

We used $59.1 million of cash to repurchase 804,882 shares of our common stock at an average purchase price of $62.12 per share and withheld 169,310 shares from employees to cover income and payroll taxes on vested equity awards.

In addition, we paid $103.3 million in cash dividends to common stockholders and repaid $35.7 million of debt and financing obligations.

During the first half of fiscal 2025, we had net payments of $2.2 million under our revolving credit facility which were primarily used for general corporate purposes, including, but not limited to, funding capital expenditures and working capital requirements.

During the first three quarters of fiscal 2026, we made net payments of $108.8 million, reflecting amounts outstanding under our revolving credit facilities.

We paid $154.7 million in cash dividends to stockholders, used $59.2 million of cash to repurchase 804,882 shares of our common stock at an average purchase price of $62.12 per share, and withheld 172,019 shares from employees to cover income and payroll taxes on vested equity awards.

We also repaid $54.9 million of debt and financing obligations.

During the first three quarters of fiscal 2025, we had net proceeds of $162.2 million under our revolving credit facility and $525.3 million under new long-term debt facilities, which primarily included our $500 million Term A-5 loan facility.

The funds from the Term A-5 loan facility were used primarily to repay all amounts outstanding under our then existing Term A-1 loan facility and outstanding borrowings under our revolving credit facility.

We used $193.8 million of cash to repurchase 2,972,221 shares of our common stock at an average price of $61.23 per share and withheld 202,190 shares from employees to cover income and payroll taxes on vested equity awards.

In addition, we paid $103.3 million in cash dividends to common stockholders and repaid $10.2 million of debt and financing obligations.

In addition, we paid $154.7 million in cash dividends to common stockholders.

For more information about our debt, see Note 10, Debt and Financing Obligations, of the Condensed Notes to Consolidated Financial Statements in “Part I, Item 1.

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Financial Statements and Supplementary Data” of the Form 10-K.

At November 23, 2025, we were in compliance with the financial covenant ratios and other covenants contained in our debt agreements.

At February 22, 2026, we were in compliance with the financial covenant ratios and other covenants contained in our debt agreements.

Obligations and Commitments

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To supplement the financial information included in this report, we have presented Adjusted EBITDA, Adjusted Gross Profit, Adjusted SG&A, Adjusted Income Tax Expense, and Adjusted Equity Method Investment Earnings, each of which is considered a non-GAAP financial measure.

We also present net sales and price/mix growth at constant currency, which provide information on the percentage change in net sales and price/mix growth, respectively, as if foreign currency exchange rates had remained constant between the prior and current periods.

Management uses these non-GAAP financial measures to assist in analyzing what management views as our core operating performance for purposes of business decision making.

Management believes that presenting these non-GAAP financial measures provides investors with useful supplemental information because they (i) provide meaningful supplemental information regarding financial performance by excluding impacts of foreign currency exchange translation and unrealized mark-to-market derivative gains and losses and other items affecting comparability between periods, (ii) permit investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate our core operating performance across periods, and (iii) otherwise provide supplemental information that may be useful to investors in evaluating our financial performance.

In addition, we believe that the presentation of these non-GAAP financial measures, when considered together with their most directly comparable GAAP financial measure and the reconciliations to those GAAP financial measures, provides investors with additional tools to understand the factors and trends affecting our underlying business than could be obtained absent these disclosures.

(ii) permit investors to view our operating and financial performance using the same tools that management uses to evaluate performance across periods and to make budgeting, operating, and strategic decisions;

and (iii) otherwise provide supplemental information that may be useful to investors in evaluating our operating and financial performance.

In addition, we believe that the presentation of these non-GAAP financial measures, when considered together with their most directly comparable GAAP financial measure and corresponding reconciliations to those GAAP financial measures, provides investors with additional tools to understand the factors and trends affecting our underlying business than could be obtained absent these disclosures.

The non-GAAP financial measures presented in this report should be viewed in addition to, and not as alternatives for, financial measures prepared in accordance with GAAP that are also presented in this report.

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The following table reconciles net income to Adjusted EBITDA:

Thirteen Weeks Ended Twenty-Six Weeks Ended

(in millions) November 23,

2025 November 24,

2024 November 23,

2025 November 24,

Thirteen Weeks Ended Thirty-Nine Weeks Ended

(in millions) February 22,

2026 February 23,

2025 February 22,

2026 February 23,

Net income (a) $ 54.0 $ 146.0 $ 180.4 $ 237.3

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Depreciation and amortization (b) 98.9 98.5 294.8 282.4

Unrealized derivative (gains) losses 12.1 3.0 7.2 (5.9)

Foreign currency exchange losses 6.8 9.6 2.1 10.2

Unrealized derivative gains (11.0) (5.9) (3.8) (11.8)

Foreign currency exchange (gains) losses (11.5) 7.0 (9.4) 17.2

Blue chip swap transaction gains (c) — (0.6) — (20.5)

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Pension settlement (f) — — 14.2 —

Adjusted EBITDA $ 285.7 $ 294.2 $ 587.8 $ 593.6

Adjusted EBITDA (g) $ 271.7 $ 373.0 $ 859.5 $ 966.6

___________________________________________

(a) Net income during the twenty-six weeks ended November 24, 2024, reflects an approximately $39 million ($30 million after-tax, or $0.21 per share) charge related to a voluntary product withdrawal initiated in the fourth quarter of fiscal 2024.

This includes an approximately $15 million charge ($11 million after-tax, or $0.08 per share) in net sales and an approximately $24 million charge ($18 million after-tax, or $0.13 per share) in cost of sales.

(a) Net income during the thirteen weeks ended February 23, 2025, included an approximately $9 million ($7 million after-tax, or $0.05 per share) benefit related to the previously announced voluntary product withdrawal initiated in the fourth quarter of fiscal 2024.

This includes an approximately $6 million benefit ($5 million after-tax, or $0.03 per share) in net sales and an approximately $3 million benefit ($2 million after-tax, or $0.02 per share) in cost of sales.

The total benefit was allocated to the reporting segments as follows:

$3 million to North America and $6 million to International.

Net income during the thirty-nine weeks ended February 23, 2025, included an approximately $31 million charge ($23 million after-tax, or $0.16 per share) related to the previously announced voluntary product withdrawal.

This includes an approximately $9 million loss ($7 million after-tax, or $0.05 per share) in net sales and an approximately $22 million charge ($17 million after-tax, or $0.12 per share) in cost of sales.

The total charge was allocated to the reporting segments as follows:

$19 million to North America and $12 million to International.

(b) Depreciation and amortization includes interest expense, income tax expense, and depreciation and amortization from equity method investments of $2.2 million and $2.0 million for the thirteen weeks ended November 23, 2025 and November 24, 2024, respectively, and $4.4 million and $4.1 million for the twenty-six weeks ended November 23, 2025 and November 24, 2024, respectively;

(b) Depreciation and amortization includes interest expense, income tax expense, and depreciation and amortization from equity method investments of $2.1 million and $2.0 million for the thirteen weeks ended February 22, 2026 and February 23, 2025, respectively, and $6.5 million and $6.1 million for the thirty-nine weeks ended February 22, 2026 and February 23, 2025, respectively.

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The blue chip swap rate can diverge significantly from Argentina ’ s official exchange rate.

(d) For more information about the Cost Savings Program and Restructuring Plan, see Footnote 4, Restructuring, in the Condensed Notes to Consolidated Financial Statements (unaudited), within “ Part I, Item I.

(d) For more information about the Cost Savings Program and Restructuring Plan, see Footnote 4, Cost Savings Program and Restructuring, in the Condensed Notes to Consolidated Financial Statements (unaudited), within “ Part I, Item I.

Financial Statements” of this Form 10-Q.

(e) Represents advisory fees related to shareholder activism matters.

(f) Pension settlement charges of $1.1 million ($0.9 million after-tax, or $0.01 per share) for the thirteen weeks ended November 23, 2025, and pension settlement charges of $14.2 million ($11.0 million after-tax, or $0.08 per share) for the twenty-six weeks ended November 23, 2025.

These charges were used to fully fund the Company’s defined benefit pension plan, enabling lump sum payments to participants, transferring the remaining obligations and related plan assets to an insurer through a group annuity contract, and transferring remaining, unelected, assets to the Pension Benefit Guaranty Corporation.

The following tables reconcile gross profit to Adjusted Gross Profit, SG&A to Adjusted SG&A, Income Tax Expense (Benefit) to Adjusted Income Tax Expense, and Equity Method Investment Earnings to Adjusted Equity Method Investment Earnings for the thirteen weeks ended November 23, 2025 and November 24, 2024.

(f) Pension settlement charges of $14.2 million ($11.0 million after-tax, or $0.08 per share) for the thirty-nine weeks ended February 22, 2026.

These charges were used to fully fund the Company’s defined benefit pension plan, enabling lump sum payments to participants and transferring the remaining obligations and related plan assets to an insurer through a group annuity contract.

(g) Adjusted EBITDA included a net $32.5 million and $45.6 million charge for the write-off of excess raw potatoes for the thirteen and thirty-nine weeks ended February 22, 2026, respectively.

The following tables reconcile gross profit to Adjusted Gross Profit, SG&A to Adjusted SG&A, and Income Tax Expense (Benefit) to Adjusted Income Tax Expense for the thirteen weeks ended February 22, 2026 and February 23, 2025.

For the Thirteen Weeks Ended

November 23, 2025 November 24, 2024 November 23, 2025 November 24, 2024 November 23, 2025 November 24, 2024 November 23, 2025 November 24, 2024

(in millions) Gross Profit Selling, General and Administrative Income Tax Expense (Benefit) Equity Method Investment Earnings

February 22, 2026 February 23, 2025 February 22, 2026 February 23, 2025 February 22, 2026 February 23, 2025

(in millions) Gross Profit Selling, General and Administrative Income Tax Expense (Benefit)

As reported $ 331.6 $ 422.5 $ 156.8 $ 164.2 $ 30.3 $ 57.5

Unrealized derivative gains 3.6 (9.8) (8.5) (12.8) 3.0 0.8 — —

Foreign currency exchange gains and losses — — (6.8) (9.6) 0.9 2.4 — —

Unrealized derivative gains and losses (11.4) (2.8) (0.4) 3.1 (2.7) (1.3)

Foreign currency exchange gains (losses) — — 11.5 (7.0) (2.9) 2.0

Blue chip swap transaction gains — — — 0.6 — (0.2)

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Shareholder activism expense — — — (3.7) — 0.8

Pension settlement — — (1.1) — 0.2 — — —

Total adjustments (4.1) (2.1) 0.6 (16.2) (2.5) 5.3

Adjusted $ 327.5 $ 420.4 $ 157.4 $ 148.0 $ 27.8 $ 62.8

The following table reconciles net sales to net sales at constant currency for the thirteen weeks ended November 23, 2025.

The following table reconciles net sales to net sales at constant currency for the thirteen weeks ended February 22, 2026.

(in millions) Net Sales Currency Net Sales at Constant Currency

Thirteen Weeks Ended November 23, 2025

Thirteen Weeks Ended February 22, 2026

North America $ 1,035.0 $ (3.7) $ 1,031.3

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$ 1,564.8 $ (47.4) $ 1,517.4

The following tables reconcile gross profit to Adjusted Gross Profit, SG&A to Adjusted SG&A, Income Tax Expense (Benefit) to Adjusted Income Tax Expense and Equity Method Investment Earnings to Adjusted Equity Method Investment Earnings for the twenty-six weeks ended November 23, 2025 and November 24, 2024.

For the Twenty-Six Weeks Ended

November 23, 2025 November 24, 2024 November 23, 2025 November 24, 2024 November 23, 2025 November 24, 2024 November 23, 2025 November 24, 2024

The following tables reconcile gross profit to Adjusted Gross Profit, SG&A to Adjusted SG&A, Income Tax Expense (Benefit) to Adjusted Income Tax Expense and Equity Method Investment Earnings to Adjusted Equity Method Investment Earnings for the thirty-nine weeks ended February 22, 2026 and February 23, 2025.

For the Thirty-Nine Weeks Ended

February 22, 2026 February 23, 2025 February 22, 2026 February 23, 2025 February 22, 2026 February 23, 2025 February 22, 2026 February 23, 2025

(in millions) Gross Profit Selling, General and Administrative Income Tax Expense (Benefit) Equity Method Investment Earnings

As reported $ 998.3 $ 1,056.3 $ 481.4 $ 492.8 $ 114.2 $ 121.7 $ 5.3 $ 15.5

Unrealized derivative gains 0.5 (12.7) (6.7) (6.8) 1.9 (1.6) — —

Foreign currency exchange losses — — (2.1) (10.2) 0.1 2.6 — —

Unrealized derivative gains and losses (10.9) (15.5) (7.1) (3.7) (0.8) (2.9) — —

Foreign currency exchange gains (losses) — — 9.4 (17.2) (2.8) 4.6 — —

Blue chip swap transaction gains — — — 20.5 — (0.8) — —

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Adjusted $ 994.3 $ 1,117.0 $ 434.9 $ 457.3 $ 132.0 $ 166.4 $ 5.3 $ 24.5

The following table reconciles net sales to net sales at constant currency for the twenty-six weeks ended November 23, 2025.

The following table reconciles net sales to net sales at constant currency for the thirty-nine weeks ended February 22, 2026.

(in millions) Net Sales Currency Net Sales at Constant Currency

Twenty-Six Weeks Ended November 23, 2025

Thirty-Nine Weeks Ended February 22, 2026

North America $ 3,189.1 $ (4.7) $ 3,184.4

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A discussion of our critical accounting policies and estimates can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Form 10-K.

There were no material changes to these critical accounting policies and estimates during the second quarter of fiscal 2026.

There were no material changes to these critical accounting policies and estimates during the third quarter of fiscal 2026.

New and Recently Adopted Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis